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Salesforce CEO Weighed Investment in Pivotal, Sources Say

Key Speakers At Cannes Lions International Festival Of CreativityKey Speakers At Cannes Lions International Festival Of Creativity
Marc Benioff, chief executive officer of Salesforce.com Inc.Photograph by Bloomberg via Getty Images

Salesforce chief executive Marc Benioff weighed a possible investment in Pivotal, the EMC-VMware spinout behind Cloud Foundry, according to well-placed sources at both Salesforce and Pivotal.

This is eyebrow-raising because Cloud Foundry is technology that businesses can use to create and deploy new software efficiently. Salesforce happens to own not one, but two Cloud Foundry competitors in Force.com and Heroku.

If Force.com, Heroku, and App Cloud—Salesforce’s attempt to bridge the two—are as great as claimed, why would Salesforce (or Benioff personally, for that matter) weigh a stake in a rival? The optics, as a PR pro might say, would be a problem.

For more, read: Salesforce Wants to Make Everyone an App Developer

Discussions of an investment, which occurred in the run-up to a $253 million Series C Pivotal funding round announced in early May, didn’t pan out. The round was led by Ford Motor Co. (F) with participation from Microsoft (MSFT) and earlier investors like General Electric (GE). Spokespeople for Pivotal and Salesforce declined to comment for this story.

The unofficial accounts out of Salesforce and Pivotal differ. A Salesforce (CRM) source said Benioff was never really interested but heard the pitch out of courtesy to Michael Dell, a friend who is driving his company’s $67 billion buyout of EMC (EMC), Pivotal’s parent company. A Pivotal source, on the other hand, said Benioff was definitely interested but backed out because of the negative reaction of Heroku and Force.com execs.

All of this angst may or may not be the reason why Tod Nielsen, Salesforce’s platform boss, decided to leave the company in March.

It’s clear that EMC and VMware (and by extension Dell) need Pivotal to succeed. The company remains headed for an IPO, the proceeds of which could help pay down the heavy debt of Dell’s purchase.

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No deal came to fruition, but the fact that Benioff even discussed an investment is of note given the competitive landscape and that Salesforce really does seem in the mood for profound change of late.

First, the San Francisco-headquartered company, which has long run its bread-and-butter sales software on internal data centers, recently said it is moving more new products and services off-site to Amazon Web Services. (Heroku, has always relied on Amazon (AMZN).) Second, while it hasn’t acknowledged it, Salesforce is also contemplating a transition away from Oracle databases and other software.

These are big, complicated migrations. If they’re on the table at Salesforce, maybe Force.com and Heroku are as well.